Derivation path

HD wallets organise keys in a tree. The path is the route from the master key to a specific key: m/purpose'/coin type'/account'/change/address index. Standards define the levels. BIP-44 uses purpose 44 for legacy addresses, BIP-49 for wrapped SegWit, BIP-84 for native SegWit and BIP-86 for Taproot. The coin type distinguishes chains, with 0 for Bitcoin and 60 for Ethereum, and the apostrophe marks hardened derivation.

Wallets pick paths automatically, so most users never see them. They matter when moving a seed phrase between wallets: if the new app uses a different path, it derives different addresses and shows an empty balance even though the funds are safe. Ethereum wallets have historically differed in whether they increment the account level or the address index, which caused confusion for users of hardware wallets.

Tools exist to scan common paths and find funds, and many wallets let users enter a custom path. Advanced setups such as multisig or Miniscript wallets need the exact paths and descriptors backed up alongside the seed, because the seed alone may not be enough to reconstruct the wallet.